Commentary on Radio & Audio

March 08, 2013

A Cold, Harsh Reality For Radio

I stayed in my seat and listened
politely, though I wanted to jump up and cross-examine the people
onstage. Frankly, I couldn't believe what I'd just heard, and it was so
important that it needed to be clarified immediately. Could it really be
true? I'd been predicting it for years, but when I heard those words,
it was like seeing an old friend I loved being knifed in the gut. I felt
victimized.

But I also felt vindicated. The moment I am referring to was during our Radio Ink
Convergence conference, held earlier this week. For two days, digital
experts talked about the surprising growth of online radio listening in
the past 12 months. We heard statistics and facts about significant
increases. We heard that the iPad is the new transistor radio and the
smartphone is the new radio receiver. We heard that Google's YouTube is
about to launch a radio service like Pandora, and that Apple is doing
the same. So what I heard should have been no surprise, and in a way it
wasn't. But it was a shock.

For a decade or more, I have been banging my fist on the
table, telling radio that a moment will come that the industry must
prepare for. Some listened, but most ignored it as some "out there"
prediction from an overzealous futurist. Yet what I'm about to tell you
is not a prediction, and it's not a guess. It's a fact. And it was a
giant shock for the people who attended Convergence.

On the stage were three representatives of the automotive
industry: one from Gartner Research, a highly respected tech research
firm; one from the Silicon Valley offices of General Motors, where they
design interactive experiences and new technology for their cars; and
one who represents an industry association for the connected car. They
were on a panel moderated by Buzz Knight of Greater Media, and they
talked about the direction of in-car experiences, the digital dashboard,
and what will be coming next to the dash of the car -- apps, Internet
radio and audio in the car, and other things we knew were on the way.
Then, suddenly, this statement was heard:

"AM and FM are being eliminated from the dash of two car
companies within two years and will be eliminated from the dash of all
cars within five years."

Gulp. Really? Did someone really just say that?

The panelists went on to say that young people don't use
radio anymore, and automakers see no need to continue to put radios in
the car. The kids want Pandora, Spotify, and other audio services, and
if they want radio, they can get it on TuneIn or iHeart or a similar
service.

I couldn't sit quietly anymore, so I went to the stage,
apologized for interrupting, and started cross-examining the panel to
find out if they really meant what they were saying. I was fuming
inside, because it appeared they were working from incorrect
assumptions. I wanted to find out if they were backed by solid data, or
if they just believe "Nobody listens to the radio."

Probing The Research
When I questioned the panelists on their statements about
the lack of youth listening, I asked if that was based on data, or is
just a Silicon Valley perception. After all, Arbitron listening
statistics don't support their claim, and they needed to know that.
Though I've seen personal evidence that young people seem to be
listening less, Arbitron numbers say that's not true.

The answer I received from the General Motors panelist is that GM uses youth consultants MTV Scratch, a unit of the giant
media company Viacom that consults with brands about connecting with
consumers and advises GM on trends. I was told there was extensive
research to support the lack of interest in radio among youth and that
GM researches everything to make sure they are giving consumers what
they want. When I asked who did the research, I was told these are
proprietary studies but clearly show trends saying young people no
longer use radio.

Goodbye, AM & FM
Now that I'd established that GM doesn't believe that youth
listen to radio, I wanted to probe the statement that two car companies
are pulling AM and FM radios, looking for specifics. I was told that is
proprietary information, and that which two companies won't have in-dash
AM and FM couldn't be shared. All they would say is that it was decided
a year ago, and it will be happening within two years. The change is
already in the works. This wasn't a prediction that this might happen.It was stated as a fact by a top industry researcher. And it seems GM's Chevrolet could be one of those automakers.

Will Others Follow?
Before the conference I'd heard a rumor that Ford and
Toyota both believe AM/FM should be left out of new cars, and that these
big radio advertisers want cars to have online radio only so they'll be
able to measure their advertising reach precisely, rather than relying
on estimates. Frankly, all other advertising has gone in that direction.
Why not radio? Another motivation is that these companies will be
offering LTE
service in their cars. So they may be doing this for the income from
data consumption, much as Apple makes money for having these services
on iPads.

We've known for a long time that radio is losing its in-car
monopoly as other music services hit the dash. But until this moment, we
didn't have confirmation from anyone in the auto industry that AM/FM
receivers will be eliminated -- by at least two companies, and soon.

If this is true -- and these people have
no reason to mislead us -- this is the most important "unofficial"
announcement in history regarding the future of broadcast radio. Though
radio broadcasts will be available through distributors like TuneIn and
iHeartRadio, your competition won't just be in-market stations anymore.
You will be facing a world full of competitors.

Many readers will be in denial after they hear this, saying
it could never happen. One commenter on our website said AM and FM will
not be removed from the dash in our lifetimes, while others raised the
costs of bandwidth. Most who hear this will be tempted to ignore it.

Alert: Within two years, AM and FM will no longer be offered by two automakers.
According to the Convergence panel, radio will be gone from all new
cars within five years. Since the automotive companies work three years
in advance, these decisions are being made now. It appears that radio
really will be gone from the dash unless it's heard through an Internet
radio distribution platform.

What can be done about this? It depends on
which camp you're in. I happen to believe that this was inevitable, and
I've been warning about it for a decade. Internet radio in car gives an
exact measurement of listening, and that could be a good thing.

But I am deeply concerned about two things:

1. Are the car companies operating on incorrectly skewed
research, or on the opinions of a youth-oriented consulting company?
It's easy to say radio is dead, but the Arbitron numbers don't support
it. GM and other car companies need to understand that if they are
wrong, there will be consumer backlash if they remove AM and FM from
cars. People love their radios. Young people don't often buy cars, and
radio is clearly stronger with baby boomers and older adults.

2. Safety is a giant concern. AM and FM
radio stays available when the power goes down. Cell towers and the
Internet do not. You can't communicate with consumers in their cars
during a storm or a mass evacuation when the signals cannot reach the
car. Plus, there are still dead spots in America where there is no cell
coverage. Is a car owner in a remote community to go without a car radio
that works?

This is a slippery slope.

So what can you do?

1. You need to believe this is happening. It's now a fact, directly from the mouths of the people behind it.

2. You had better start working out a strategy to strengthen
your brand relationship with your audience now so they'll still seek
you out when they have tens of thousands of other choices.

3. You need to be on the TuneIn or iHeart platforms (probably both), and you need to be streaming.

4. If you want to fight this, you may want to consider
starting with your local congressman. Congress may wish to consider
legislation to require in-car receivers for safety purposes -- though
I'm not big on forcing regulation on consumer preferences. But Hurricane
Sandy made it clear once again that Internet and cell signals cannot be
relied upon for safety, and radio is the only means of communication
that stays on the air in an emergency. Removing it from cars might not
go over well with consumers for that reason alone.

5. You may consider having a talk with your biggest
advertisers, local car dealers, to ask them to offer their input to the
car companies. Pressure can change things quickly -- but be careful;
this approach could backfire.

Whatever you do, don't ignore this. As Bill Burton of the
Detroit Radio Advertising Group always says, a car is a radio on wheels.
We've owned the car, and traffic has been a friend to radio
listening. But it appears that, unless something changes, the AM/FM
signal to the car will soon be a thing of the past. Whether these same
companies will still offer HD Radio needs to be addressed -- it may or
may not be part of their plans. If it is, you'll be forced to upgrade to
HD to reach people in new cars.

Most people at the conference found this
very unsettling, and I suspect it will create quite a ruckus in our
industry, forcing the issue and bringing more details to light. Let's
hope so. We need all the facts so we as an industry can properly
respond.

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All new cars will have the dashboard with AM/FM for ever. There is a renaissance of AMStereo with full audio of 10 -15 khz as a come - back. The new PDM transmitters make amstereo sounds like FM stereo and the coverage is suberb. More and more local radio will pop up in the future on the AM dial.

It is not hard for me to understand the emotion on either side of this discussion. However, technology's ability to alter content distribution and change consumer consumption behaviors cannot be argued away in favor of the status quo.

Not too many years ago, I had the privilege to be part of the XM Sales & Marketing Solutions Group that introduced that platform to major brands and agencies successfully.

I remember in 2006 writing a note asking what would happen to Sat Rad when wireless digital audio would be available in cars?

I could never then imagine some of today's smart phones, dash screens and entertainment offerings but I knew it would bring compelling competition if we did not get ahead of it.

I was told we would be long gone before that happened--and we were!!

Now look at Sirius/XM's growth (popularity) with all key demographics compared to the pure play brands over the past few years.

It is clear that digital audio entertainment is here to stay but the distribution and listening opportunities have been forever changed.

I think accepting the change and debating how best to adapt strong terrestrial brands and skills to benefit from the new digital interest (demand) would be a better use of time and passion for all.

This is what happens when a handful of companies own all the decent signals and reduce the programming/staff budgets to the ridiculous.
When I used to program Radio stations the goal was always to convert passive audience into active audience, and it worked! It takes talent, skill, and lots of energy to accomplish this.
Now that Radio consists of mostly voice-tracked, satellite-delivered, pay for play garbage that substitutes for music, or 4 sports-talk formats in a single market, there is no compelling reason to listen.
And the argument of status quo for Radios in automobiles as an emergency info source can be shot full of holes by the same argument....who is actually at the Radio station to deliver this news/info? Most automatic EANS alerts I've heard in the past few years are so low in quality or distorted that a listener can't understand what's being said.
IMHO "market clustering" has killed the goose, so don't expect any eggs in the future. And it's only a matter of time until the FCC will want your frequency spectrum back for more wireless space. You guys have screwed the pooch!

It's amazing the people who are ready to write off
Radio saying, "Good Riddance, nothing good has come
out of it since the 60's. But I didn't see that same person
mention a word of how he didn't pay a dime to listen to it,
except for buying a receiver. Wait, that came with
The car. And you had to pay for one to receive XM/Sirius.
But then you had to pay for a subscription. So are
You really any further ahead. Thank God you didn't
Have to suffer through those horrendous ads that
Paved the way for you to get it for free. But that's ok.
Now you have to buy a subscription to Angie's list
To find the best plumber in your neighborhood as the
yellow pages has all but gone away. Yeah,
You're way ahead of the curve. The one thing
You haven't mentioned is that the web has leveled
the playing field. Now you can have a company that
Has a website that's just as nice as the big guys and
Still suck....you can't decipher the size of the
Business anymore. It's coming to the point where
You'll pay for every service by subscription but
How long before you whine about that? Did you
pay to listen to radio? No. Then why did you
take it for granted? Did you try to support any of those
Businesses who paid to keep it free? Now everyone can do a podcast
Whenever and wherever. Great, a flood of amateurs
that do it as a hobby. And the majority have
no sense of what they're doing meaning it will sound
even more like ish. And like any amateur,
they'll do it until they lose interest and pull the
Plug in a minute when they're bored.

I'm not in radio or any other broadcast market but I always appreciated having access to local radio in my car and home especially when the local national weather service breaks into my local station to let me know there is a tornado or blizzard etc coming. Near as I can figure from just a listeners stand point, living in the middle of nowhere USA, the more local control we give up it seems the more Governmental control comes in. This has connotations far beyond my or anyone else's listening pleasure. History is repeating itself, people have forgotten t look around and have their own voice. I am NOT in any industry and having lived in major cities and isolated rural areas radio is freedom, internet is more controlled. Look at news reports in the last year where foreign governments silenced people by stopping their access to the rest of the world. It is happening daily, people just want to be entertained, but at what cost?

Here's my take on this. First using Arbitron as a measure of the younger crowd to want AM/FM is a very unrealistic measure. All cars have AM/FM now and in many cars, that is the only option, so if you're measuring based on what they are listening too, when you only have AM/FM as an option, your numbers are skewed.

While I"m not a 20 something already, I don't care about local radio. I do a fair amount of car rentals and if I get Satellite, I'm off to that instead of local channels. If I get a car that has bluetooth, I sync my iPhone up to it and I'm more likely to play music off of it rather than listen to AM/FM. But since I'm not the target market, I'll use my two 20 something son's as additional support. Both have bluetooth ready radio's in their car. The older one is probably 50/50 radio vs. streaming over his phone and the radio is for local sports talk. The younger one, pretty much only uses his phone over bluetooth.

Give the younger generation a choice and AM/FM won't be it.

Other than the historic tragedy or for people who are not able to handle technology, there really isn't much of a reason to keep AM/FM in the car. However all that said, given how cheap those items are I don't see why they couldn't keep them, it wouldn't hurt.

Waa, waa, waa! "If I can't have a radio in my car, I won't buy a new one." Guess what, no one cares. I don't even have a radio in my house anymore. I haven't turned the radio on in my car in months. I'm also over 50. No one under 40 cares about radio in their cars.

Sounds about right. My kids never turn on the radio, they don't even own one. Can't remember the last time I turned on AM radio, my middle-aged self. You'll probably be able to buy AM/FM for your car, just like you can buy a manual transmission... if you can find one.

EAS is going to individual cell phone alerts (eg CodeRed) tied to GPS. Too many homes don't have landlines anymore, and there are precious few locally programmed radio stations either.

Though I agree with your comments and concerns, Eric...it amazes me GM would use M-TV as the basis for research. It's hardly unbiased...M-TV has been trying to become "the authority" for music and pop culture since it came on the air in the 1980's. So, I question some of the validity of their research. Yet, as you would suggest, it is what it is. And it's obvious many of these major advertisers no longer believe the comprehensive, unbiased qualitative research radio has been offering (or perhaps radio's sales people just can't explain it well enough).

As for the issue of "news radio": some of the major broadcast companies have cut back. They're fools. Their ratings are down and they wonder why and, instead allow people to blame their entertainment programming. (That's the talk shows, for those of you in Rio Linda...er, just kidding on that phrase.) The "News/Talk" format has always required a strong local news presence. I know. I've been in and around the format since the early 70's.

Fortunately, I work for a group that has formed collaborations with our sister TV and newspapers. That allows us to be able to have staff in the building to follow the local news 24/7/365. Even though we don't do local casts overnight and at some times on weekends, we have the ability to call in staff to do it as needed.

But, even that alone will not "save" radio in the long run. The internet connections, mobile phone apps, streaming, websites, Facebook and Twitter are all part of the solution. And broadcasters will, as usual, have to be dragged kicking and screaming into it, because they never want to spend the money unless they have to.

But of local news? Yes, it's an expense that's hard to explain to stockholders. But, you'd better try...because the spoken word may be what saves the industry in the future. We can't count on just music radio with no personality coming out of a computer to survive.

B S Sure to be on the dash maybe in a different way but there. Don't forget G M was under, until our bail out . I remember my first broadcast 1960. Was told A M is dying . Then in the 70's FM will be the death of AM. Really suprising in that these so called experts don't realize because of digital so much can fit on a small portion of the dashboard now.

A suggested name very fitting for the first car to drop radio. How about EDSAL.
In all reality Eric 50 + and boomers assure another 30 yrs on the dashboard. PPM future is
bleak. They loved us until November...Now say we have lost 100 thousand cume. Impossible..

Remember your other prediction that McDonalds would never sell more then 500 hamburgers
was off the mark :) too

Something else free we will have to pay to listen to. when are they going to learn new isn't always betterbetter and there is more than a youth market out there! If i spend money on a high end car there should be a radio or a choice of one or it will not be bought.i'm not a kid with a souped up tuner car, the bass booming the pavement three cars away. Make not having a radio an option delete. i agree with the emergency aspect of have am/fm in cars or are we to carry a portable am/fm in the car? So many other improvements should be made before this is seriously considered.

That may be true. But most local radio is NOT offering local radio news. In my market, there is only ONE local morning show left. All the others are syndicated. I stopped listening around 10 years ago, for the most part.

I own an Internet station and host a live daily show in the afternoons. I play classic country, announce community events, weather, traffic as needed, etc. My station is on Live365, Radio Terra, TuneIn and maybe someday it can get on iHeart.

My wife would be delighted if she could hear it in the car. I can, if I am with her and take the iPad along. When the streets flooded here in 2008 I was the only one in town announcing them. My wife had to call me to find out where they were. We have a 99 Toyota Camry that is definitely not a connected car.

My Internet station will be 12 years old this July. It can survive..but things are lean.

"I couldn't sit quietly anymore, so I went to the stage, apologized for interrupting, and started cross-examining the panel."

Two giant shills for HD Radio, Eric and Greater Media. This sounds like Mr. Mighty Red had scripted his response all along. Eric, how many times did you and the panelists reherse this dog-and-pony-show to make a push for HD Radio?